SINGAPORE, Jan 23 (Reuters) – U.S. President Donald Trump’s decision to slap tariffs on solar panel imports is a blow to a booming global industry.

The protectionist measures will pull investments in the technology out of the United States and into Asia and other regions, as the industry tries to make up for the lost opportunity in America, industry sources said on Tuesday.

Trump on Monday approved a 30 percent tariff on solar cell and module imports that will drop to 15 percent within four years. Up to 2.5 gigawatt (GW) of unassembled solar cell imports are allowed tariff-free in each year.

The decision will likely curb growth in U.S. capacity, the world’s fourth-largest after China, Japan and Germany. Globally, solar capacity has soared to almost 400 GW last year from under 10 GW in 2007, according to the International Renewable Energy Administration.

The U.S. government argued that its domestic manufacturers could not compete with what it said were artificially lower-priced Asian panels.

Chinese panel makers, the world’s biggest builders of solar photo-voltaic cells, will be hit hardest by the tariffs at their production sites across Asia.

Trade disputes will likely curb Chinese solar companies’ expansion overseas, the country’s Ministry of Industry and Information Technology (MIIT) also warned in a statement following the news.

“China’s solar industry has been growing at a fast pace in recent years, making itself a target of protectionism in some countries,” the MIIT said, adding that it will continue to encourage Chinese solar companies to “moderately” expand overseas.

South Korea said it would “actively respond to U.S. trade protectionism”, including exercising its rights under the World Trade Organization.

Beyond the impact to the solar market, Morgan Stanley warned of wider economic damage as the protectionist stance “could challenge investors’ perception whether the U.S. will adhere to current free trade policies.”

POTENTIAL EXEMPTIONS

There is still uncertainty on when the tariffs will be implemented and how the 2.5 GW of tariff-free imports will be administered.

Shares of U.S. panel maker SunPower climbed 0.8 percent on Monday and shares of electric car maker Tesla , which also produces solar panels, gained 1.5 percent on the day.

Yet analysts warned that the benefits for U.S. solar firms were not clear-cut.

“The overwhelming majority of the 260,000 solar jobs in the U.S. depend on the cheaper imported products,” Height Securities said.

Wood Mackenzie estimated the tariffs would reduce U.S. solar installation growth by 10 to 15 percent over the next five years.

There remains the possibility of some manufacturers winning exclusions to the tariffs.

“Two key exclusions with respect to technology and certain countries (Canada/Singapore, among others) were included as part of the (initial) recommendation … The status of whether these exclusions … will be in focus in the coming days,” Goldman Sachs said.

Canadian Solar is one the world’s biggest panel manufacturers. In Singapore, unlisted REC operates one of the city-state’s biggest manufacturing sites.

Doran Hole, Chief Executive Officer for North America at U.S.-listed ReneSola, said there may still be ways to settle the trade dispute.

“There is quite a bit of discretion about … negotiations for a settlement. Having a global settlement would certainly be useful to the industry as a whole.”